S&P Global Carbon 2023: EU CBAM to Boost International Carbon Pricing -- OPIS
November 07 2023 - 12:15PM
Dow Jones News
PARIS--Mandatory carbon markets and the European Union's carbon
border adjustment mechanism (CBAM) will promote the expansion of
international carbon pricing more than other measures, panelists
said at the S&P Global Carbon Markets Conference on
Tuesday.
In a panel discussion on the growth of carbon trading schemes,
representatives from Shell and Morgan Stanley said that mandatory
regulated carbon markets were the best way to price carbon
worldwide.
Nick Osborne, general manager of carbon and environmental
products trading at Shell, told delegates that the UK-based oil
major sees growth in regulated carbon markets worldwide, with
carbon schemes in the EU, China and other countries driving the
creation of new cap-and-trade emissions trading systems
elsewhere.
"[Regulated carbon markets] are predictable, there's a clear set
of rules and [the markets] are constantly expanding," Osborne said.
"We'd like to see a global carbon price, and the growth of these
markets is key."
For Osborne, the convergence toward a global carbon price will
be driven by the establishment of different compliance carbon
schemes around the world and especially by the CBAM, which will be
phased in over 2026-2034, eventually applying the EU carbon
emissions price in full to imports of carbon-intensive products in
the steel, cement and chemicals sectors, among others.
The EU allowances (EUAs) futures contract settled at EUR75.84/mt
($80.97) on Monday.
"No country is excited about [applying] a carbon tax to other
countries, maybe CBAM is how a [global] convergence [of regulated
carbon markets] starts," the Shell executive said.
Osborne pointed to the current development of national carbon
schemes in China and Brazil as a "virtuous consequence" of the EU
Emissions Trading System, which was established in 2005.
VCM Corporate Buyers Becoming Savvier: Morgan Stanley
Teresa Hartmann, chief ratings officer at BeZero Carbon, a
global ratings agency for the voluntary carbon market, told
delegates that there is still plenty of confidence on the part of
investors and project developers despite the current state of the
VCM, which has seen falling prices and transaction volumes.
OPIS Voluntary REDD+ Credits daily mean assessments hit a record
high in the fourth quarter of 2022, with the OPIS Voluntary REDD+
V22 credits average price peaking at $16.983/mt on October 10 last
year. The OPIS Voluntary REDD+ V22 credits average price was at
$12.627/mt on Monday.
"What we're seeing is that a lot of people are building climate
projects and we need it everywhere and we need it now," Hartmann
said. "It's a great avenue for us to take a look at [carbon]
projects before they come to the market as they're being built
out."
Jean-Baptiste Brom, head of origination for environmental
products at U.S. financial institution Morgan Stanley, said that
the fall in VCM transactions due to press reports and increased
calls for scrutiny "can be a bit [disconcerting]." But he suggested
that corporate clients had become more knowledgeable about carbon
credits and offsets in recent years.
"Two years ago, in a call with a buyer [they would ask] 'what is
a carbon offset?' and now it's 'how can I procure this and what are
the best practices?'," Brom said. "There's a lot more conversations
on methodology."
However, Brom remarked that the voluntary side of the carbon
market has "no rhyme or reason" and that companies in hard-to-abate
sectors are preparing for 2030 and 2040 by decarbonizing their own
physical activities as opposed to looking to voluntary carbon
credits in the first instance.
The S&P Global Carbon Markets Conference runs November 6-8
in Paris.
This content was created by Oil Price Information Service, which
is operated by Dow Jones & Co. OPIS is run independently from
Dow Jones Newswires and The Wall Street Journal.
--Reporting by Humberto J. Rocha, hrocha@opisnet.com and Jeremy
Rakes, jrakes@opisnet.com; Editing by Anthony Lane,
alane@opisnet.com
(END) Dow Jones Newswires
November 07, 2023 12:00 ET (17:00 GMT)
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